A few notable names have started paying dividends this year — and a handful of stocks may have what it takes to pass on income to investors, Wolfe Research found. This year alone, big names that have announced their first dividend payments include Salesforce and Meta Platforms. Alphabet joined the ranks of dividend payers in April when it approved its first-ever dividend of 20 cents per share, along with a $70 billion share buyback. Alphabet’s move to implement a dividend is something to celebrate, but the real excitement is in the prospect of growing that payment to investors, Charlie Gaffney, managing director at Morgan Stanley Investment Management, told in April CNBC. He also manages the Eaton Vance Enhanced Equity Income Fund, which owns shares of the Google parent company. “We are pleased that they have taken this initiative, but we are also excited about the opportunity to grow the dividend over time,” he said. That said, a few more names may be about to make their first dividend payments, according to a May 20 report from Wolfe. “After a period of minimal dividend initiatives over the past decade (growth-oriented market, COVID), there has been an increase in announcements over the past six to 12 months,” said Chris Senyek, chief investment strategist at Wolfe. The company has been screening potential dividend initiatives, looking for names with strong free cash flow yields, that are currently returning capital to investors through share repurchases and that do not have high levels of debt. Some names are listed below. Shoe manufacturer Skechers made Wolfe’s list. Shares are up 13% through 2025, and according to Wolfe’s analysis, the company has estimated free cash flow to yield a solid 3% through 2024. Analysts are also generally bullish on the stock, with 11 of 14 covering the name calling it a Buy or Strong Buy, according to LSEG. “We see strong pricing, an improving sales mix and fixed cost leverage as margin tailwinds,” UBS said April 15 about buy-rated Skechers. “We expect the sales of SKX, [earnings before interest and taxes] Margins and profits will grow much faster than the market expects.” Wolfe also mentioned O’Reilly Automotive as a potential dividend initiator, highlighting that the company’s estimated free cash flow will be a solid 3% in 2024. The stock are up just 1.5% through 2024, but the name remains beloved by the Street, rated a buy or strong buy by 64% of analysts covering it, according to LSEG O’Reilly was named a top pick at TD last month. Cowen, the stock appears priced for perfection, but fundamentals and execution remain strong, and we would use a potential pullback as an opportunity to add.” PayPal also joined Wolfe’s list of contenders that may be about to pay a dividend. According to Wolfe’s analysis, the flow to a solid return is 7% for 2024. The stock is posting a year-to-date gain. modest gain of 1%, and 20 of the 47 analysts covering the name consider it a buy or a strong buy, according to LSEG consensus price targets imply a 22% upside from current levels. Wolfe isn’t alone on Wall Street shop highlighting PayPal as possible dividend originator Morgan Stanley earlier this month named the stock as a company that could potentially pay a dividend, adding it to a list of ideas that have a “net cash position and enough free cash flow to be self-sustaining.” to keep and finance itself’. [a dividend]Other names on the list include Mattel, Fiserv and Centene.
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These companies may be ready to pay a dividend, Wolfe says
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